Gulf Island Fabrication(US:GIFI)2024-05-07 21:52PART I FINANCIAL INFORMATION Financial Statements Presents unaudited consolidated financial statements for Q1 2024, highlighting increased net income from asset sale and stable liquidity Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $99,731 | $101,627 | | Total Assets | $127,758 | $128,428 | | Total Current Liabilities | $22,830 | $29,847 | | Total Liabilities | $42,314 | $49,457 | | Total Shareholders' Equity | $85,444 | $78,971 | Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $42,881 | $62,168 | | Gross Profit | $6,124 | $5,034 | | Operating Income | $5,708 | $328 | | Net Income | $6,240 | $641 | | Diluted Income per Share | $0.37 | $0.04 | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,019 | $1,296 | | Net cash used in investing activities | ($12,453) | ($5,219) | | Net cash used in financing activities | ($273) | ($1,184) | | Net decrease in cash | ($5,707) | ($5,107) | - In February 2024, the company sold excess real property from its Fabrication Division (Houma AHFS) for net cash proceeds of $8.5 million, resulting in a net gain of $2.9 million4457 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reviews Q1 2024 performance, highlighting revenue decline, net income growth from asset sale, and strategic diversification Overview and Strategic Initiatives Winding down its Shipyard Division, the company focuses on workforce expansion, project execution, and diversifying into onshore and green energy - The wind-down of the Shipyard Division is substantially complete, with final completion expected in Q1 2025 after the warranty periods for the Ferry Projects expire110122 - Strategic initiatives are focused on generating stable, profitable growth by expanding the skilled workforce, improving project execution, diversifying the services business, and pursuing new end markets119120 - The company is actively pursuing new growth end markets to reduce reliance on offshore oil and gas, including fabricating structures for onshore industrial facilities, green energy transitions (biofuels, hydrogen), and offshore wind developments126127 New Project Awards and Backlog New project awards increased to $43.8 million in Q1 2024, with backlog rising to $13.9 million, primarily in Fabrication New Project Awards by Division (in thousands) | Division | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Services | $25,468 | $21,472 | | Fabrication | $18,272 | $16,706 | | Shipyard | $278 | ($122) | | Total | $43,818 | $37,628 | Backlog by Division (in thousands) | Division | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Services | $437 | $502 | | Fabrication | $12,873 | $11,739 | | Shipyard | $577 | $709 | | Total | $13,887 | $12,950 | Results of Operations Consolidated revenue decreased 31.0% to $42.9 million due to a canceled project, but net income significantly rose to $6.2 million from an asset sale and reduced G&A Consolidated Results Summary (in thousands) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $42,881 | $62,168 | $(19,287) | | Gross Profit | $6,124 | $5,034 | $1,090 | | Gross Profit % | 14.3% | 8.1% | +6.2 p.p. | | Net Income | $6,240 | $641 | $5,599 | - The revenue decrease was primarily driven by the Fabrication Division, which saw revenue fall by $22.5 million due to the absence of the offshore jackets project that was canceled in July 2023135150 - Net income was significantly boosted by a $2.9 million gain on the sale of the Houma AHFS and a $1.7 million decrease in G&A expense due to the elimination of legal fees from the resolved MPSV Litigation136139142 - The Services Division revenue grew 18.3% YoY to $25.5 million, driven by higher offshore services work and its welding enclosures business line143145 Liquidity and Capital Resources The company maintained strong liquidity with $61.3 million in total cash and investments, generating $7.0 million in operating cash flow, and anticipates further capital expenditures Available Liquidity (in thousands) | Component | March 31, 2024 | | :--- | :--- | | Cash and cash equivalents | $32,469 | | Short-term investments | $27,352 | | Restricted cash | $1,475 | | Total | $61,296 | - Net cash provided by operating activities was $7.0 million in Q1 2024, a significant improvement from $1.3 million in Q1 2023163 - The company anticipates capital expenditures of approximately $2.5 million to $3.0 million for the remainder of 2024, primarily for upgrades to its Houma Facilities170 Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2024, with no material changes to internal control over financial reporting in Q1 2024 - Based on an evaluation as of March 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective173 - There were no changes in internal control over financial reporting during Q1 2024 that have materially affected, or are reasonably likely to materially affect, internal controls174 PART II OTHER INFORMATION Legal Proceedings This section details legal matters, primarily the resolution of the MPSV Litigation in October 2023, dismissed with prejudice, leading to a $20.0 million Note Agreement - The MPSV Litigation against Hornbeck Offshore Services, LLC was dismissed in full with prejudice on October 4, 2023, after the parties reached an agreement86177 - In connection with the litigation resolution, the company entered into a Settlement Agreement and a $20.0 million promissory note with Zurich, payable in 15 annual installments starting December 31, 20247986 Risk Factors There have been no material changes to the company's risk factors from those disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes to the company's risk factors from those disclosed in the 2023 Annual Report178 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 60,860 shares for approximately $0.3 million in Q1 2024, with $4.6 million remaining under the Share Repurchase Program Issuer Purchases of Equity Securities (Q1 2024) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining in Program (in thousands) | | :--- | :--- | :--- | :--- | | Jan 2024 | 40,360 | $4.47 | $4,691 | | Feb 2024 | 20,500 | $4.50 | $4,599 | | Mar 2024 | 0 | $— | $4,599 | | Total | 60,860 | $4.48 | | - The Share Repurchase Program, approved in December 2023, authorizes up to $5.0 million in stock repurchases through December 15, 202495180 Exhibits This section lists exhibits filed with Form 10-Q, including corporate governance documents, CEO and CFO certifications, and Inline XBRL financial data - The filing includes required CEO and CFO certifications (Exhibits 31.1, 31.2, 32) and financial data in Inline XBRL format (Exhibits 101, 104)183